Developing economic contacts between the United States and DPRK is a hot topic in America’s regional diplomacy. Viable models for such cooperation—in fields from tourism to light manufacturing—already exist in ROK–DPRK joint projects. Walter Keats, founder and president of Asia Pacific Travel, Ltd. has the pictures to prove it. 

Breaking down the common perception of North Korea’s economy as a stagnant and monolithic socialist façade, Keats told his audience that the DPRK has been experimenting with economic reforms for more than a decade. Most of the early efforts—which usually entailed creating special economic zones (SEZs) along the Chinese model—have faltered on poor planning and inexperience. Since 1998, however, North Korea has been working with South Korean corporations to develop two special zones, at Mount Kumgang and Kaesong, and the results have been encouraging.





Thursday, February 22, 2007


Facilitated by the South Korean government as part of its Sunshine Policy, the Hyundai Asan corporation has set up a tourist resort at Mount Kumgang in the North. Though over a million South Koreans have visited since the resort opened, Keats is one of only a handful of Americans to make the trip. Cycling through digital photos of modern hotels, hiking trails, timeshare bungalows and restaurants, Keats described an Epcot-like tourist experience.

The North Korean employees are reticent with the South Korean guests, he explained, and avoid all non-professional contact. All employees are carefully vetted by the North’s political administrators and no employees receive their paychecks directly: their wages are paid to the North Korean government. Similar conditions, Keats explained, were imposed on the employees of China’s first SEZs. Eventually, through careful engagement, a more liberal regime developed. Pointing out numerous photos of North Koreans interacting with affluent, tolerant South Korean guests, Keats said he believes the steady contact with outsiders is quietly changing their worldview.

Keats also displayed photos from his trip to the Kaesong industrial complex: a special zone in the North where companies from the South can set up manufacturing centers. Though only in the first phase of its development, Kaesong already has 14 factories and employs 10,000 North Korean workers. Far from being the Dickensenian labor camp that North Korea’s critics contend, Keats pointed out images of tidy, modern factory floors and healthy, engaged workers. Kaesong and the patient engagement that led to its creation, he believes, can be repeated by American companies and begin to ease hostilities between the U.S. and DPRK.

Models for Economic Cooperation with North Korea

Inside Kumgang and Kaesong

Forum

with

Walter Keats
President, Asia Pacific Travel, Ltd.


Walter Keats, founder and president of Asia Pacific Travel, Ltd., has visited the DPRK six times since 1995-most recently touring Kumgang and Kaesong in September 2006. An expert on Asia's tourist industry, Keats is a graduate of Harvard University and the University of Chicago Graduate School of Business. He is a member of The Korea Society, the National Committee on North Korea and the Chicago Council on Global Affairs.

Original Announcement:

The daily headlines on North Korea feature economic sanctions, nuclear threats and looming famines. Left uncovered, however, is the related and vital question of how the world community can help modernize the DPRK's economy. South Korea and the Hyundai Asan Corporation are providing answers, partnering with North Korea to run the Kumgang special tourism zone and the Kaesong Industrial Complex-with other projects in Paektusan and Pyongyang possible.